It will not be suitable for those who are averse to foreign currency exchange rate risk. However, if you already plan to hold on to A$ long term or intend to use A$ for future needs (eg education funding or retirement), then holding A$ would be ok.

As the RBA looks set to increase interest rates as the recovery is underway, locking in the interest at 4% for the next 4.5 years is not a good move. In addition, the forex rate of A$ has seen a strong recovery since the low in 2009 and looks like on down trend as the US$ appreciates against all other currencies.

Thus, in my opinion, it is not the right time to go into this investment. Moreover, it would be better to place with the bank in a foreign currency fixed deposit as the capital is still guaranteed for early withdrawal compared to this endowment. And the potential for the interest rates to move up within the next 4.5 years is very high, allowing enjoyment of a higher return for year on year maturity of the fixed deposit. Taking into consideration the effects of compounding, the returns of this endowment is not significantly more.

0
comments:

Featured Blogger

Singapore Memory Project

About Me

I hope that you will find this site useful and informative.
Do drop me your feedback on how i can further improve.
And should u have any queries and comments, please post them and i shall be more than happy to address them.

Labels

Disclaimer

Privacy

The owner of this blog does not share personal information with third-parties nor does the owner store information is collected about your visit for use other than to analyze content performance through the use of cookies, which you can turn off at anytime by modifying your Internet browser’s settings. The owner is not responsible for the republishing of the content found on this blog on other Web sites or media without permission.

Blog Comments

The owner of this blog reserves the right to edit or delete any comments submitted to this blog without notice due to;

1. Comments deemed to be spam or questionable spam2. Comments including profanity3. Comments containing language or concepts that could be deemed offensive4. Comments that attack a person individually

Terms and Conditions

All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.

This policy is subject to change at anytime.

About This Blog

To promote the education of individuals for the need to have a healthy lifestyle and wealth management through proper financial planning, particularly in investments.